Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 23 October 2015

Brisbane looking up

Brisbane looking well

'Tis an odd thing, by but the Detailed Labour Force figures are so often overlooked or ignored by market commentary, though fortunately not by everybody. Here's ex-Reserve Bank boffin and now ANZ market economist Justin Fabo.

Indeed so, the employment data has improved significantly for Brisbane over the year to September 2015. Let's take a look at the latest figures in 3 short parts.

Part 1 - Large states

Most employment growth over the last 12 months has taken place in Sydney (+68k) and Melbourne (+55k)...but lookee here, because hey presto, regional New South Wales is now creating jobs again (+55k)!

Regional New South Wales has seen jobs created particularly in Newcastle & Lake Macquarie, the Hunter Valley and the Illawarra. On the other hand regional Victoria has seen total employment decline.

Looking at employment growth cumulatively in the two most populous states, we can see that the outlook in regional New South Wales has certainly improved, although the most employment is still created in the Greater Metropolitan area. 

Better still, the total figures reported for regional unemployment now seems to be declining again after a worrying surge through 2014.

This represents evidence that at least some of the fallout from mining and construction contract layoffs is now in the rear view mirror, at least from an employment perspective. While aggregate demand may still be in declining in some mining regions, many of those contracted for the construction phase of mining projects have now returned to the capital cities. 

Part 2 - Brisbane bounce

The other location which created a material number of jobs over the past year was Brisbane (+34k).

In fairness - while not charted here due to immateriality - Hobart's small labour market has also been picking up very nicely (+3k).

Not so much doing elsewhere.

Piecing the jobs growth data together, over the past year the growth in employment has been almost entirely accounted for by Greater Sydney (30 per cent), Greater Melbourne (25 per cent), Greater Brisbane (15 per cent), and regional New South Wales (24 per cent).

Part 3 - Unemployment dispersion

The dispersion of unemployment rates across Australia continues.

Amazingly enough Hobart recorded an unemployment rate of just 4.9 per cent in September, a remarkable turnaround as the Aussie dollar has depreciated, evidently boosting the local economy.

Unemployment has also declined steadily in Greater Brisbane (5.4 per cent) and Melbourne (6.3 per cent).

Meanwhile in Greater Sydney unemployment remains relatively low (5.3 per cent), though the Sydney result has been skewed higher by rising unemployment rates on the Central Coast, and in Blacktown.

On the other hand, Perth (6.1 per cent) and Adelaide (7.6 per cent) have unemployment rates that remain in a clear uptrend.

Smoothing the original data on a rolling annual basis reveals the dispersion more clearly, with Hobart, Brisbane, and Melbourne showing the greatest improvement.

I've been concerned about unemployment rates in a number of regional centres of the last year or two, so it has been pleasing to see the reported unemployment rates falling sharply in cities such as Geelong (4.8 per cent), Newcastle (5.1 per cent), the Hunter (7.3 per cent), though unemployment rates remain too high for comfort in a number of Queensland regions.

Greater Brisbane's unemployment rate has ticked down to 5.9 per cent on a 12mMA basis after some elevated readings at the beginning of 2015, despite an unemployment rate of above 9 per cent in Logan-Beaudesert.

On the other hand Greater Adelaide's unemployment rate is now tracking consistently at around 7.6 per cent or above, and has ticked up to 7.3 per cent on a 12mMA basis. 

From a property market perspective, of the cities outside Sydney and Melbourne, Hobart and Brisbane look to have the brightest outlook over the year ahead, in spite a looming supply overhang of units in some inner locations in Brisbane's case.